Wholesale clubs face moderate pressure from suppliers even

though they are able to utilize economies of scale. The level

of economies of scale these companies have is restricted by
the supplier’s limited reliance on them because of the
massive amount of retailers they sell to. The strategy used
by wholesalers gives them an advantage which reduces the
power of manufacturers. The bargaining power of Costco
sells too many business owners; the power over their
suppliers is very high, as suppliers are forced to cut prices to
lessen the risk of them losing their contract. Costco have a
small range of brands for each product, yet sell high
quantities. They could be losing a large amount of sales
compared to Wholesalers like Wal-Mart, whom give
customers a larger amount of choice and therefore spread
their sales between suppliers. Furthermore Costco have
proven they are willing to lose even major brands to improve
their leverage, margins and lower prices, forcing suppliers to
compete amongst themselves and with the wholesalers
cheaper own brand products. Highlighted through Costco’s
most recent decision to stop selling Coca-Cola in a pricing
dispute due to growing power of private labels, by using
details received from loyalty cards retailers are more aware
of which brands to keep and lose.